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  3. 2) state |state probability | a expansion 0.4 norm

2) State |State probability | A Expansion 0.4 Normal 0.3 Recession 0.3 |B|C | 19%...

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Accounting

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2) State |State probability | A Expansion 0.4 Normal 0.3 Recession 0.3 |B|C | 19% | 8% | 12% | 15% | 6%, 7% | -10% | 2% | -1% a) Suppose one has constructed a portfolio consisting of stocks A, B and C. They have constructed the portfolio with 30% in stock A, 20% in stock B and 50% in stock C. Compute the expected return of the portfolio. (4 points) b) Compute the standard deviation of the expected returns for the portfolio. (5 points)

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